MONTREAL — A construction boss is delivering a burst of allegations about a system of corruption in the industry that saw him pay Canada’s most powerful Mafia family a 2.5 per cent cut on public contracts.

Lino Zambito told Quebec’s public inquiry about a cartel-like system lording over the construction industry in the province and he said he was part of it.

He said companies would rig bids and take turns winning public-works contracts and, at the end of the process, the Cosa Nostra claimed a percentage.

He said that, as far as his own company was concerned, that fee was a 2.5 per cent share of the value of a sewer project, paid to the once-dominant Rizzuto family.

Zambito shrugged off a suggestion from an inquiry lawyer that he was paying protection money.

“I saw it as more of a business. Entrepreneurs made money and there was a certain amount owed to people of,” he said and, pausing an instant before he completed his sentence, Zambito added, “the Mafia.”

He even defended his personal ties to the Mafia. He said his family knew the Rizzutos from the old country and said they were part of the same tight-knit community whose members helped each other out when they newcomers to Canada.

Zambito’s testimony sheds light on allegations made three years ago in media reports that triggered demands for an inquiry that is now underway in Quebec. That inquiry is now probing links between the underworld, the construction industry and political parties.

Zambito is the first person to describe, in such extensive detail and so publicly, his own personal involvement in construction-related wrongdoing.

His performance at this probe is reminiscent of the role played by Jean Brault at the federal sponsorship inquiry — that of a businessman blowing the whistle on wrongdoing in which he personally participated.

But the scope of the alleged corruption being discussed at the Quebec industry potentially dwarfs the sums involved in the sponsorship scandal that rattled federal politics.

In this case, according to a police officer who testified at the Quebec inquiry, the Mafia has imposed a so-called “tax” of up to 30 per cent on the construction industry in the area. Firms are alleged to engage in price-fixing, setting bid prices artificially high and turning over some of the profits to the Mafia.

The inquiry heard earlier on Thursday that representatives from more than five dozen construction companies visited a Mafia hangout several years ago, with the RCMP watching.

An investigator for the Charbonneau inquiry testified that his team later cross-referenced those plates and tied the vehicles to more than 60 construction companies.

He pointed out that some entrepreneurs own multiple companies. But the investigator, Eric Vecchio, noted that a good number of companies that received public-works contracts in Montreal, for things like excavation and sewers, were represented at that party.

For instance, he said six out of 10 companies that received contracts for sewer work were represented at that Christmas party in a now-closed “social club.”

Later in the day, when he was on the witness stand, Zambito rattled off the names of companies he said were involved in price-fixing. But he said the system has existed for years and was originally established by the companies themselves — not by the Mafia.

He said the rules were made clear to him when he first entered the business around 1999 and submitted an extremely low bid — nearly at cost price — for a project. He said he was informed that if he wanted to work anywhere near Montreal, or the surrounding areas, he’d have to play by those rules.

“The market in Montreal was closed and hermetically sealed,” he said.

“If you didn’t follow the rules, you didn’t work in Montreal. You can go work elsewhere.”

Zambito now faces criminal charges related to an alleged corruption scheme involving his construction business. His company, Infrabec, went bankrupt last year after two directors including Zambito were arrested on fraud charges amid allegations of a widespread collusion scheme in the municipality of Boisbriand.

Among the people arrested with them were Sylvie St-Jean, the city’s former mayor.

On Thursday, Montreal’s mayor called a news conference where he expressed outrage over the revelations trickling out at the Charbonneau inquiry.

“As a citizen, as the mayor of Montreal, I was profoundly angered,” Gerald Tremblay said.

He demanded that the provincial legislature convene immediately, several weeks ahead of schedule, for an emergency session to toughen contracting laws so that the city can legally bar certain companies from public-works contracts.

Tremblay has also asked for an administrative review into a former city employee who happened to be the daughter of one of the construction bosses seen handing over stacks of cash to a late Mafia don in police surveillance video.

This was one day after the Charbonneau inquiry saw old videos of construction bosses handing over money to the now-deceased Nicolo Rizzuto, the one-time head of the Sicilian Mafia in Canada.

The videos and evidence were amassed during Operation Colisee, a five-year investigation that culminated in mass arrests in 2006 in the largest sweep against the Italian Mafia in Canadian history.

But much of the construction-related evidence was ignored. Because construction wasn’t part of the RCMP investigation, which centred on drugs and illegal gambling, officers either ignored evidence or even turned off surveillance microphones while mobsters were talking to construction bosses.

The inquiry head, France Charbonneau, explained today that the RCMP decision was a legal matter. She said that, in Canada, police investigators cannot listen to conversations involving people not specifically targeted in a wiretap investigation.

The recordings have created a splash now, years later, at the inquiry which is investigating allegations of criminal corruption in the construction industry and its ties to organized crime and political parties.

Tremblay said he wants to hear more about why the evidence was never used.

He said it could have prompted political action years ago that would have saved untold sums of taxpayer money. Tremblay said he wished the material had been handed over to the provincial police.

“I don’t understand,” Tremblay said. “I’m deeply angry about that.”

Note to readers: This is a corrected story. An earlier version said the 60-plus companies had representatives there, at the Mafia hangout, at the Christmas party alone.